- Revenue increased 28% year-over-year to $17.8 million - Net
income increased 45% to $4.6 million - Affirms FY 2010 and FY 2011
Guidance DAQING, China, Feb. 5 /PRNewswire-Asia-FirstCall/ -- China
Nutrifruit Group Limited (NYSE Amex: CNGL) ("China Nutrifruit" or
"the Company"), a leading producer of premium specialty fruit based
products in China ("PRC"), today reported financial results for the
third fiscal quarter ended December 31, 2009. Third Quarter Fiscal
Year ("FY") 2010 Highlights -- Net sales increased 28.4%
year-over-year to $17.8 million -- Gross profit increased 34.8%
year-over-year to $8.1 million, with gross margin of 45.7% --
Operating earnings increased 40.6% year-over-year to $6.2 million,
with operating margin of 34.9% -- Net income increased 44.7%
year-over-year to $4.6 million, or $0.11 per diluted share --
Successfully raised aggregate gross proceeds of approximately $13.3
million in private placement financing -- Began production of new
glazed fruit production line at the Company's Daqing facility in
Heilongjiang Province, China "China Nutrifruit had a strong third
quarter with solid year-over-year growth in both revenue and net
income. As planned, we successfully added a new glazed fruit
production line during the quarter which will further boost sales
of our rapidly growing glazed fruit products," commented Mr.
Changjun Yu, Chairman of China Nutrifruit. "We experienced a
healthy harvest with our facilities operating at a utilization rate
in excess of 90%. Our new glazed fruit production line began
production in December and will help us meet the growing market
demand for our products." Third Quarter FY 2010 Results Net sales
for the third quarter of FY 2010 increased 28.4% to $17.8 million,
as compared to $13.9 million in the same quarter of fiscal 2009.
The strong growth in sales was attributable to the increase in
sales volume driven by rising market demand and growth in consumer
spending. During the third quarter, net sales from concentrated
juice products, which accounted for 47.2% of total net sales, were
$8.4 million. Net sales from glazed fruit reached $5.4 million,
contributing 30.1% of the net sales during the quarter compared to
6.1% in the prior year primarily due to increased sales of the
Company's new blueberry glazed fruit product. Gross profit for the
third quarter of FY 2010 grew 34.8% to $8.1 million, from $6.0
million for the same period a year ago. Gross margin was 45.7% for
the third quarter of FY 2010 compared to 43.5% in the third quarter
of FY 2009. The increase in gross margin was mainly due to product
mix changes resulting in increased sales of glazed fruit products
which had a higher margin of 51.9%, compared with fruit concentrate
and concentrate pulp products, which had gross margins of 44.4% and
28.3%, respectively, during the quarter. In the third quarter of FY
2010, selling, general, and administrative expenses were $1.9
million, up 18.6% from $1.6 million in the same period last year.
Selling expenses were $1.1 million, or 6.1% of net sales, compared
to $0.9 million, or 6.8% of net sales, in the third quarter of FY
2009. Selling expenses as a percentage of net sales declined due to
lower sales related travel expenses as the Company's established
customer relationships resulted in a higher volume of repeat orders
from existing customers. General and administrative ("G&A")
expenses were $0.8 million, up 22.9% from $0.7 million a year ago.
As a percentage of net sales, G&A expenses decreased to 4.6%
compared to 4.8% in the third quarter of FY 2009. Operating
earnings in the third quarter of FY 2010 rose 40.6% to $6.2
million, from $4.4 million in the comparable period last year.
Provision for income taxes was $1.6 million compared to $1.1
million a year ago. Net income in the third quarter of FY 2010 was
$4.6 million, or $0.11 per diluted share, up 44.7% from $3.2
million, or $0.09 per diluted share a year ago. The calculation of
diluted earnings per share for the third quarter of fiscal 2010 is
based on 40.2 million shares compared to share count of 36.1
million in the third quarter of fiscal 2009. Nine Months Results
For the nine months ended December 31, 2009, net sales were $46.5
million, up 28.4% from $36.2 million for the nine months ended
December 31, 2009. Net sales from concentrated juice products
increased 10.8% to $20.1 million from $18.1 million in the
comparable period last year and accounted for 43.2% of total net
sales. Net sales from glazed fruit grew 110.4% to $10.2 million
from $4.8 million in the same period last year and accounted for
21.9% of net sales. Sales of concentrate pulp products increased
185.1% to $6.4 million, as compared to $2.2 million in the prior
year, and accounted for 13.7% of total net sales. Gross profit
increased 26.6% to $21.8 million from $17.2 million a year ago.
Gross margin was 46.8% in the first nine months of FY 2010 compared
to 47.5% in the comparable period a year ago. Earnings from
operations were $16.8 million, up 23.4% from $13.6 million last
year. Net income for the nine months ended December 31, 2009 was
$12.5 million, or $0.33 per diluted share, up 25.7% from $10.0
million, or $0.51 per diluted share, in the same period of FY 2009.
The calculation of diluted earnings per share for the first nine
months of FY 2010 is based on 37.5 million shares compared to share
count of 19.5 million in the comparable period of fiscal 2009.
Financial Condition As of December 31, 2009, China Nutrifruit had
$19.1 million in cash and cash equivalents, $3.0 million in total
liabilities with no long-term debt and working capital of $39.3
million. Shareholders' equity was $58.9 million as of December 31,
2009. In first nine months of FY2010, the Company generated $5.7
million in cash flow from operating activities due to net income,
the collection of trade receivables offset by the increase in
inventory during the production season. Business Outlook China
Nutrifruit plans to construct a new fruit and vegetable powder
manufacturing facility in Daqing, Heilongjiang Province with an
annual production capacity of 10,000 tons at a total cost of
approximately $19.1 million. The new facility is expected to begin
production in September 2010 and will produce tomato, pumpkin and
other popular fruit and vegetable powders that can be used as
ingredients in a variety of food products. The Company expects the
new line to contribute approximately $13 to $14 million in revenue
for fiscal year 2011. In addition, China Nutrifruit is seeking to
maximize utilization at its new automated glazed fruit production
line. The Company affirms previously issued fiscal 2010 and 2011
guidance. For FY 2010, the Company expects approximately $72.0 -
$76.0 million in revenue and $18.5 million in net income, excluding
non-cash stock compensation expenses. For FY 2011, the Company
expects approximately $90-$95 million in revenue, and projected net
income of approximately $22-$23 million. "We expect strong consumer
spending and an increasing demand for healthy products to continue
to drive demand for specialty fruit and beverage products. We have
received a great deal of interest and demand from both domestic and
international distributors for fruit and vegetable powder products.
This high growth segment complements our existing product lines and
we plan to leverage our widespread network of suppliers and
distributors to sell these products," said Mr. Yu. "We intend to
enhance our position as a premium food processor by continuing to
introduce new products and utilizing our strong distribution
network, industry relationships, and production efficiency."
Conference Call Information Management will conduct a conference
call at 9:00 a.m. Eastern Time on Friday, February 5, 2010 to
discuss its third fiscal quarter 2010 results. To participate in
the conference call, please dial the following number five to ten
minutes prior to the scheduled conference call time: 877-380-4607.
International callers should dial +1-702-928-6995. The conference
ID number for the call is 53493754. If you are unable to
participate in the call at this time, a replay will be available on
Friday, February 5, 2010 at 11:00 a.m. Eastern Time, through
Friday, February 19, 2010. To access the replay, dial 800-642-1687.
International callers should dial +1-706-645-9291. The conference
ID number for the replay is 53493754. About China Nutrifruit Group
Limited Through its subsidiary Daqing Longheda Food Company
Limited, China Nutrifruit, is engaged in developing, processing,
marketing and distributing a variety of food products processed
primarily from premium specialty fruits grown in Northeast China,
including golden berry, crab apple, blueberry and raspberry. The
Company's processing facility possesses ISO9001 and HACCP series
qualifications. Currently, the Company has established an extensive
nationwide sales and distribution network throughout 20 Provinces
in China. For more information, please visit
http://www.chinanutrifruit.com/ . Forward-Looking Statements This
press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended
(the "Exchange Act""). Such statements include, among others, those
concerning our projections for the new fruit and vegetable powder
manufacturing facility, expected financial performance in FY 2010
and FY2011 and strategic and operational plans, our expectations
regarding the market for our products, our expectations regarding
the continued growth of the specialty fruit and beverage market, as
well as all assumptions, expectations, predictions, intentions or
beliefs about future events. You are cautioned that any such
forward-looking statements are not guarantees of future performance
and that a number of risks and uncertainties could cause actual
results of the Company to differ materially from those anticipated,
expressed or implied in the forward-looking statements. The words
"believe," "expect," "anticipate," "project," "targets,"
"optimistic," "intend," "aim," "will" or similar expressions are
intended to identify forward-looking statements. All statements
other than statements of historical fact are statements that could
be deemed forward-looking statements. Risks and uncertainties that
could cause actual results to differ materially from those
anticipated include risks related to new and existing products; any
projections of sales, earnings, revenue, margins or other financial
items; any statements of the plans, strategies and objectives of
management for future operations; any statements regarding future
economic conditions or performance; uncertainties related to
conducting business in China; any statements of belief or
intention; any of the factors mentioned in the "Risk Factors"
section of our Annual Report on Form 10-K for the year ended March
31, 2009, and other risks and uncertainties mentioned in our other
reports filed with the Securities and Exchange Commission. The
Company assumes no obligation and does not intend to update any
forward-looking statements, except as required by law. - Financial
Tables Follow - CHINA NUTRIFRUIT GROUP LIMITED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Stated in US
Dollars) December 31, March 31, 2009 2009 ASSETS Current assets:
Cash and cash equivalents $19,135,592 $4,768,542 Proceeds from
private placement held in escrow account 931,630 -- Trade
receivables, net of allowance 8,284,033 11,423,996 Inventories, net
13,706,578 3,692,892 Other current assets 191,365 481,679 Total
current assets 42,249,198 20,367,109 Property and equipment, net
18,253,354 16,614,930 Deferred tax assets 1,241,881 1,406,814 Land
use rights, net 186,563 189,303 TOTAL ASSETS $61,930,996
$38,578,156 LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities: Other payables and accrued expenses $929,175
$2,675,983 Trade payables 507,906 260,322 Income taxes payable
1,554,027 1,416,835 Total current liabilities 2,991,108 4,353,140
Non-current liabilities: Amounts due to shareholders -- 7,407,748
TOTAL LIABILITIES 2,991,108 11,760,888 Commitments and
Contingencies Shareholders' equity Preferred stock Authorized:
5,000,000 shares, par value $0.001 Issued and outstanding: 402,968
shares as at December 31, 2009; (nil as at March 31, 2009) 403 --
Common stock Authorized: 120,000,000 shares, par value $0.001
Issued and outstanding: 36,125,754 shares as at December 31, 2009;
(36,125,754 shares as at March 31, 2009) 36,126 36,126 Additional
paid-in-capital 36,376,516 16,746,971 Noncontrolling interests --
-- Statutory reserves - restricted 4,563,920 2,873,880 Accumulated
other comprehensive income 406,223 425,675 Retained earnings
17,556,700 6,734,616 TOTAL SHAREHOLDERS' EQUITY 58,939,888
26,817,268 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $61,930,996
$38,578,156 CHINA NUTRIFRUIT GROUP limited AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Stated in
US Dollars) Three months ended Nine months ended December 31,
December 31, 2009 2008 2009 2008 Net sales $17,816,916 $13,873,857
$46,502,988 $36,212,228 Cost of sales (9,680,959) (7,836,719)
(24,734,449) (19,020,828) Gross profit 8,135,957 6,037,138
21,768,539 17,191,400 Selling expenses (1,094,111) (945,802)
(2,592,363) (2,035,655) General and administrative expenses
(816,069) (664,202) (2,333,033) (1,505,804) Operating earnings
6,225,777 4,427,134 16,843,143 13,649,941 Other income (expenses)
Interest expense -- (128,455) -- (318,050) Other income 9,204 6,555
48,575 26,092 Total other income (expenses) 9,204 (121,900) 48,575
(291,958) Earnings before noncontrolling interests and income taxes
6,234,981 4,305,234 16,891,718 13,357,983 Provision for income
taxes (1,609,004) (1,107,292) (4,379,594) (3,190,845) Earnings
before noncontrolling interests 4,625,977 3,197,942 12,512,124
10,167,138 Noncontrolling interests -- -- -- (209,308) Net earnings
4,625,977 3,197,942 12,512,124 9,957,830 Other comprehensive income
Foreign currency translation (39,255) (34,698) (19,452) (402,187)
Comprehensive income $4,586,722 $3,163,244 $12,492,672 $9,555,643
Earnings per share Basic $0.12 $0.09 $0.34 $0.51 Diluted $0.11
$0.09 $0.33 $0.51 Weighted average number of common stock
outstanding Basic 36,125,754 36,061,476 36,125,754 19,463,339
Diluted 40,167,345 36,091,242 37,507,917 19,465,518 CHINA
NUTRIFRUIT GROUP LIMITED AND SUBSIDIARIES CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (UNAUDITED) (Stated in US Dollars) Nine
months ended December 31, 2009 2008 Operating activities: Net
earnings $12,512,124 $9,957,830 Adjustments to reconcile net
earnings to net cash used in operating activities Noncontrolling
interests -- 209,308 Depreciation and amortization 1,120,793
654,849 Benefit for deferred income taxes 164,934 (53,113) Loss on
disposal of property and equipment -- 289 Changes in operating
assets and liabilities: Trade receivables 3,149,316 172,808
Inventories (10,010,662) (10,501,428) Prepayments 291,788 (499,412)
Other current assets (1,462) (64,981) Trade payables 247,371
1,049,463 Income taxes payable 136,031 425,577 Advances from
customers -- 1,727,701 Consideration payables -- (5,352,352) Amount
due to a director -- (59,076) Amount due to an affiliate -- --
Other payables and accrued expenses (1,908,952) (116,020) Net cash
provided by/(used in) operating activities 5,701,281 (2,448,557)
Investing activities: Cash outflow from acquisition of subsidiaries
-- (1,451,038) Purchases of property and equipment (2,577,984)
(13,102,841) Proceeds from disposal of property and equipment --
3,918 Net cash used in investing activities (2,577,984)
(14,549,961) Financing activities: Proceeds from borrowings --
4,353,113 Repayment of borrowings -- -- Amounts due to shareholders
-- 7,360,552 Proceeds from issue of common stock -- 8,578,706
Proceeds from issuances of preferred stocks 12,006,646 -- Proceeds
from issuances of warrants 1,302,354 -- Cost of raising capital
(1,094,047) (1,741,421) Net cash provided by financing activities
12,214,953 18,550,950 Increase in cash and cash equivalents
15,338,250 1,552,432 Effect of exchange rate on cash and cash
equivalents (39,570) (260,356) Cash and cash equivalents at
beginning of the period 4,768,542 7,104,849 Cash and cash
equivalents and proceeds from private placement held in escrow
account at end of the period $20,067,222 $8,396,925 Analysis of
balances: Proceeds from private placement held in escrow account
$931,630 $-- Cash and cash equivalents 19,135,592 8,396,925
$20,067,222 $8,396,925 Supplemental disclosure of cash flows
information: Cash paid for: Interest $-- $318,050 Income taxes
$4,078,629 $2,818,381 Supplemental disclosure of non-cash
information: Issuance of warrants $367,156 $-- Purchases of
property and equipment $160,183 $-- For more information, please
contact: Company Contact: Mr. Colman Cheng, Chief Financial Officer
China Nutrifruit Group Limited Phone: +852-9039-8111 Email: Web:
http://www.chinanutrifruit.com/ Investor Relations Contact: Mr.
Crocker Coulson, President CCG Investor Relations Phone:
+1-646-213-1915 (NY office) Email: Web: http://www.ccgirasia.com/
Elaine Ketchmere, Partner Email: Phone: +1-310-954-1345 (LA office)
DATASOURCE: China Nutrifruit Group Limited CONTACT: Colman Cheng,
Chief Financial Officer of China Nutrifruit Group Limited,
+852-9039-8111, ; or Investors, Crocker Coulson, President,
+1-646-213-1915 (NY office), , or Elaine Ketchmere, Partner, ,
+1-310-954-1345 (LA office), both of CCG Investor Relations Web
site: http://www.chinanutrifruit.com/
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